Monday, March 06, 2006

Here comes Ma Bell again

The more things change, the more they stay the same, or so it seems. With the announcement that AT&T is to buy Bell South for $67 billion, the world of telecommunications is moving one step closer to the reassembly of an old monopoly: namely the old "Ma Bell"/AT&T local and long-distance telephone monopoly that dominated U.S. telecommunications for nearly 70 years. The monopoly (or near-monopoly) was not dissolved until 1984. It was allowed to remain in place for so long because AT&T managed to argue successfully that its business was a "natural monopoly" that wouldn't work effectively in a competitive environment.

Now one of the "Baby Bells," Bell South, is coming back to momma in a deal that, if approved, will see four of the original 7 Baby Bells brought back together under AT&T's wing. Ironically, perhaps, the old "monopoly" is reassembling precisely because of fear of competition. And it's not exactly a monopoly anymore precisely because of all that competition--which is not from other traditional phone companies but from cable companies, cell phone companies, internet companies and other hi-tech firms all entering the digitally converging new media environment of 2006.

So it's a very different AT&T ("Ma Bell") than the one that used to rule the roost from the 1920s through the 1970s. But although it won't be a monopoly--natural or otherwise--it will be huge. The New York Times notes that with all this competition, "and more and more services available on mobile phones and on the Internet, companies like AT&T are trying to bulk up and turn themselves into one-stop shops for all communications needs." And AT&T is really bulking up for this battle. The "new" AT&T--which, as NPR's Jim Zarolli notes, already has more customers than any other U.S. telecom--will be dramatically expanded under this deal. The combined company "would also have full control of Cingular Wireless, the largest cell phone provider in the U.S." It will have 360,000 employees, 70 million local telephone customers, 10 million broadband customers, and it'll be a massive player in all aspects of the telecom business. And it'll be streets ahead of its nearest rival, Verizon. In fact it might be a bit too big and powerful for its own good. The deal has to be approved by the government's antitrust regulators in the Justice Department. Let's see what happens there.